A meeting of the Finance-Auditing Committee/Committee of the Whole was held in the Board Room, Administration Building, Toll Plaza, San Francisco, California, on Friday, October 10, 2008, at 9:20 a.m., Chair Stroeh presiding.

In a report to Committee, Director of Accounting Bette Joe, Auditor-Controller Joseph M. Wire and General Manager Celia Kupersmith provided a report on staff’s recommendation to authorize execution of a Professional Services Agreement with Wells Fargo Bank, N.A., (Wells Fargo) relative to Request for Proposals (RFP) No. 2009-D-2, Banking and Associated Financial Services. The report stated that staff is recommending that the Board of Directors do business with a new financial institution to provide bank depository and related cash management services as stated above.

The report stated that on April 29, 2008, staff issued RFP No. 2009-D-2. This RFP was issued only to banks that met the requirement of having an established banking relationship with the Local Agency Investment Fund, an investment pool participated in by the District and other California public agencies. The District received six proposals by the due date of June 17, 2008. An Evaluation Committee, comprised of District staff, evaluated the proposals according to the criteria set forth in the RFP: (1) compatible product line, qualifications and experience; (2) customer service from assigned relationship manager and team; (3) banking reporting and information access capabilities; and, (4) fee structure. The report also stated that the Evaluation Committee subsequently interviewed three firms, with the final determination that Wells Fargo Bank, N.A., (Wells Fargo) was best qualified to provide banking services for the District. The report indicated that along with interviews, the Evaluation Committee conducted reference checks and visited Wells Fargo’s central vault site to assure security needs and to clarify transaction work flow.

The report noted that Wells Fargo received the highest ranking for its product lines, location of branch offices, credit rating, and reporting capabilities. In addition, the key personnel who participated in the interview demonstrated a high level of knowledge and understanding of the District’s needs. It is recommended that a professional services agreement be executed with Wells Fargo in the amount of approximately $225,000 for a five-year term. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/REILLY to forward the following recommendation to the Board of Directors for its consideration.

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors authorize execution of a Professional Services Agreement with Wells Fargo Bank, N.A., relative to Request for Proposals No. 2009-D-2, Banking and Associated Financial Services, in the amount of approximately $225,000 for a five-year term, beginning no later than June 30, 2009; with the understanding that requisite funds (100% District) are available in the FY 08/09 District Division Operating Budget, and with the further understanding that requisite funds for the remaining years of the project will be included in the Operating Budgets for future fiscal years.

Action by the Board at its meeting of October 10, 2008 – Resolution
NON-CONSENT CALENDAR

Approve a Change to the Commission Structure for Golden Gate Transit Fare Media

In a memorandum to Committee, Auditor-Controller Joseph Wire and General Manager Celia Kupersmith reported on staff’s recommendation to change the commission structure paid to third-party vendors who sell Golden Gate Transit fare media from a percentage-based commission of 4% of sales to a sales commission of one dollar per magnetic stripe ticket sold. The report stated that the District currently compensates third-party vendors who sell Golden Gate Transit Ride Value and Frequent Ferry Rider ticket media on behalf of the District. The tiered compensation structure is an initial 4% for the first $5,000 worth of media sold per month, decreasing to a 1% commission for sales over $5,000 per month.

The report also stated that with the introduction of the new fareboxes on Golden Gate Transit buses in the near future, the Frequent Rider Discount Program will change from a ride-based ticket book to a stored value magnetic stripe ticket. The tickets will be sold in a variety of denominations (i.e., $25, $50, $75), and will be a single ticket that holds the value that is deducted through the farebox. Due to this change in fare media, it is recommended that the commission rate be changed. It is anticipated that the savings for this new type of commission will be approximately 2% less than our current structure or $85,000 annually, based on current trends. The report noted that the commission for ticket books will remain on a percentage basis until discontinued. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Joseph Wire summarized the staff report, noting that the 4% commission that the District has historically paid to its ticket vendors is one of the highest such commissions paid by transit agencies in the Bay Area.

Discussion ensued, including the following:

Director Grosboll inquired as to whether staff was concerned that some merchants may no longer wish to sell Golden Gate Transit fare media due to the change in the commission structure. In response, Mr. Wire stated that District staff is working with the current vendors in order to retain their services, and is always seeking new vendors. Staff will be educating the vendors on the advantages of selling a single type of magnetic stripe fare card, in lieu of the current method which is the use of many different types of ticket books, which are bulkier and require more storage space.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/PAHRE to forward the following recommendation to the Board of Directors for its consideration.

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors approve a change to the commission structure paid to third party vendors who sell Golden Gate Transit fare media from a percentage-based commission of 4% to a sales commission of $1.00 per magnetic stripe ticket sold, effective January 1, 2009.

Action by the Board at its meeting of October 10, 2008 – Resolution
NON-CONSENT CALENDAR

The report stated that in September 2007, Golden Gate Ferry participated in the full roll out of the TransLink® fare payment system. Since it was a new and still-evolving fare payment system, the District continued to offer Frequent Ferry Rider ticket books in addition to accepting TransLink® for fare payment. At this time, however, TransLink® is currently experiencing 100% reliability at the Ferry Division and has exceeded the 95% “up-time” performance standard for the last five months. The report also stated that in July 2008, the largest employer benefit provider in the region launched their “e voucher” solution, now making it possible to apply tax-free benefits from an employer directly (and electronically) to a TransLink® card. Currently, about 25% of ferry customers use TransLink® as their fare payment mechanism. The report further stated that staff will be developing a comprehensive transition plan to communicate, educate and make available TransLink® cards to transitioning customers. As an additional courtesy to transitioning customers, staff proposes a 30-day grace period following the December 31, 2008, expiration date to use any remaining Frequent Ferry Rider tickets.

The report stated that it is recommended that the “Frequent Ferry Rider” ticket books be eliminated, effective December 31, 2008, with the transition to TransLink® as the sole means of obtaining the Frequent Ferry Rider fare discount on Golden Gate Ferry. The report noted that TransLink® has been stable and reliable at the Ferry Division since it launched, and that the elimination of the redundant paper tickets will assist with streamlining operating efficiencies at the Ferry Division, as well as streamlining the administration of the vendor network. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Celia Kupersmith summarized the staff report, noting that this recommendation is the next step in the District’s process of transitioning to new fare media from paper tickets. She also stated that it is the goal of the District to eventually transition to the use of TransLink® as the sole discount fare media, and eliminate paper tickets entirely. She further stated that it is much easier to begin this transition at Golden Gate Ferry, because ferry customers are already familiar with TransLink®.

Discussion ensued, including the following inquiries:

Director Reilly inquired as to when TransLink® will be fully implemented on all Bay Area transit operators. In response, Ms. Kupersmith provided a status report on the efforts of San Francisco MUNI, Caltrain and BART to become revenue ready with TransLink®.

Director Grosboll inquired as to whether the 30-day grace period would present any problems for ticket customers. In response, Mr. Wire stated that the District has provided a 30-day grace period to its customers for a number of years.

Staff recommended and the Committee concurred by motion made and seconded by Directors EDDIE/COCHRAN to forward the following recommendation to the Board of Directors for its consideration.

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors authorize the elimination of “Frequent Ferry Rider” ticket books, effective December 31, 2008; and, approve the transition to TransLink® as the sole method of receiving Golden Gate Ferry frequent rider discounts.

Action by the Board at its meeting of October 10, 2008 – Ordinance
NON-CONSENT CALENDAR

Authorize Execution of a Five-Year Agreement with MARIN.ORG/MIDAS for Data Communication Services

In a report to Committee, Information Systems Director Robert Haar, Deputy General Manager, Administration Z. Wayne Johnson and General Manager Celia Kupersmith provided staff’s recommendation regarding execution of a five-year agreement with MARIN.ORG/MIDAS to provide data communication services to the District.

The report stated that the District’s eight work locations are electronically connected by data communications services that also provide access to the Internet. These data communications services have been in place for many years, but have reached capacity in recent months. These services are in need of replacement in order to provide additional, upgraded capacity between locations, improved internet access from each location, and critically needed redundancy for the data link between San Rafael facilities and the Bridge Toll Plaza/Administration Building.

The report also stated that staff has identified three suppliers able to provide these services to the eight District locations, including two commercial providers, Verizon and AT&T, and MARIN.ORG/MIDAS, which is a branch of the County of Marin. The report described the cost comparisons between the three data communications providers, noting that MARIN.ORG/MIDAS has negotitated a pricing schedule with AT&T that results in discounted service rates. MARIN.ORG/MIDAS provides network services only to local government agencies, schools and nonprofit organizations. Its customers include the County of Marin, the Marin Municipal Water District, all Marin County cities and towns with the exception of Corte Madera, all Marin public libraries, nonprofit organizations such as the Marin Community Foundation, as well as independent schools. In addition, MARIN.ORG/MIDAS has also provided the District’s internet access without interuption for the past 10 years.

The report further stated that staff has determined that it would be uneconomical to procure the necessary services through a traditional competitive procurement. Procuring such services through direct negotiations with MARIN.ORG/MIDAS is not prohibited by state law, and is consistent with the District’s procurement policy. Staff and the Attorney for the District have negotiated terms and conditions with the County of Marin for these services that are consistent with industry practices. It is recommended that a five-year agreement be executed with MARIN.ORG/MIDAS, in the amount of $93,230 per year, for a total five-year cost of $466,150, with an option to extend this agreement on an annual basis thereafter, exercisable by the General Manager or her designee. A copy of the report is available in the Office of the District Secretary and on the District’s web site.

At the meeting, Celia Kupersmith summarized the staff report, noting that MARIN.ORG/MIDAS’ cost proposal to provide data communication services was one-third less expensive than the cost proposals of the commercial providers. She noted that the District receives its web site hosting services through the County of Mendocino, also at a discounted price.

Staff recommended and the Committee concurred by motion made and seconded by Directors COCHRAN/PAHRE to forward the following recommendation to the Board of Directors for its consideration.

RECOMMENDATION

The Finance-Auditing Committee recommends that the Board of Directors authorize execution of an Agreement with MARIN.ORG/MIDAS, in the amount of $93,230 per year, for a five-year term, to provide data communication services to the District, with an option to extend this Agreement on an annual basis thereafter, exercisable by the General Manager or her designee; with the understanding that requisite funds are available in the FY 08/09 District Division Operating Budget, and with the further understanding that requisite funds for the remaining years of the project will be included in the Operating Budgets for future fiscal years.

Action by the Board at its meeting of October 10, 2008 – Resolution
NON-CONSENT CALENDAR